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CFOs pursue growth agenda despite Brexit concerns

CFOs see increasing risks to their business from Brexit and a slowing UK economy and are reacting with a renewed focus on cost control, according to Deloitte’s latest CFO Survey. However, domestic concerns have not blunted CFOs’ search for growth and opportunities.

A total of 112 CFOs of FTSE 350 and other large private companies participated in the Q4 2017 CFO Survey.

The combined market capitalisation of the 83 UK-listed companies who participated is £512 billion, approximately 19 per cent of the UK quoted equity market. Brexit remains the top concern CFOs say their business faces, giving it (on a scale of 0-100) a ranking of 62, up from 58 last quarter. Brexit is followed by weak demand in the UK (59, up from 53) and weak UK productivity (49, up from 43).

Thirty eight per cent of CFOs say there is a high or very high level of uncertainty facing their business, up from 35 per cent last quarter but down from 50 per cent one year ago and well below levels seen during the euro crisis and in the wake of the EU referendum.

Seventy three per cent of CFOs say they expect the overall business environment to be worse following Brexit, up from 60 per cent in Q3 and the highest reading yet, but in line with levels seen in Q2 2017.

Some 41 per cent say they expect hiring within their business to slow as a result of Brexit, up from 36 per cent in Q3, while 39 per cent expect their capital spending to decrease, up from 30 per cent last quarter.

Fifty one per cent of CFOs say that reducing costs is a strong priority for their business over the coming 12 months. But they have not shifted away from growth.

The priority CFOs attach to expansion over the next 12 months, whether organically, through acquisitions or introducing new products or services or moving into new markets, is at its highest level since this question was first asked in 2009.

Paul Schofield, practice senior partner at Deloitte in Cambridge, said: “Encouragingly, far from backing away from growth as they did in previous periods of uncertainty, CFOs are putting more emphasis on expansion.

“The priority CFOs attach to expansion over the next 12 months, whether organically, through acquisitions, introducing new products and services or moving into new markets, is at its highest level since 2009. It seems that an accelerating global economy is helping to counter the effects of uncertainty close to home.

“While the impact of Brexit remains the dominant concern for CFOs, it has not forced a retreat from growth or crushed the animal spirits of the corporate sector.The central challenge for UK business over the next 12 months will be achieving growth in an environment of stringent cost-control.”